Capital leasing firms helped in China

By Crystal Hsu / Staff reporter

Taiwanese capital leasing companies in China may expand into its factoring market by setting up new units to help customers process account receivables, the Financial Supervisory Commission said yesterday.

The latest deregulation aims to help capital leasing firms to expand in China given their close links to factoring service providers.

“Capital leasing and factoring companies may share business information and other resources so they can better tack clients’ cash flows and make best use of their capital,” the commission said in a statement.

Only capital leasing firms with capital of US$30 million or more are qualified to establish factoring units, and they must control 100 percent stakes in them to simplify capital structure and avoid conflict of interest, the commission said.

Currently, there are 19 Taiwanese capital leasing companies in China, 10 of them owned by domestic banks and another nine controlled by subsidiaries of financial holding companies, the commission said.

The capital leasing firms are in Suzhou, Tianjin, Shanghai, Chengdu, and Shenzhen, with combined investments of US$475 million, the commission said.

The commission also gave local banks the green light to sell gold and silver coins issued by China now that they can legally enter Taiwan and domestic lenders can conduct yuan business.

The easing will give Taiwanese extra investment channels, but banks must alert customers of risks, fees, and costs involved, the commission said.

Gold investment, particularly, does not generate interest income or enjoy deposit insurance coverage, and is subject to price volatility, the commission said.